Mid-Day Gold & Silver Market Report – 12/12/2013

Ted Prince

12/12/2013 1:58:00 PM

POSITIVE ECONOMIC SIGNS CONTINUE TO FUEL FED TAPER SPECULATION

The Gold price has fallen nearly $30 today as ongoing strength in U.S. economic data and a successful resolution to budget negotiations in Washington points to a possible reduction in the Federal Reserve’s monetary easing program as early as next week.  "The weakness seen in the morning, due to the U.S. budget deal talk, has been (exacerbated) by U.S. data showing more strength in the economy and supporting the dollar,'' Georgette Boele, commodity analyst at ABN Amro, said. The monthly Federal Open Market Committee meeting convenes next week on December 17-18.  Analysts and investors alike will be closely monitoring the outcome of the meeting for an announcement regarding a Fed stimulus taper.  Many experts believe that an initial scale-down in the current level of quantitative easing (QE) will be announced no later than March of next year if not sooner.  QE has been very supportive of the metal in the past.  However, growing speculation of a stimulus taper has caused Precious Metals prices to decline this year, thus creating a strong demand for physical bars and coins. 

Uplifting economic data has depressed equities yet again as the S&P 500 is set to realize its lowest close in one month.  “We’ve had a lot of pretty good economic news lately and in the face of that data we’re seeing the market starting to digest the exuberance it has had in 2013,” Randy Bateman, chief investment officer of Huntington Asset Advisors, said. “A lot of it might be in anticipation of the FOMC announcement next week and whether this good economic news is enough for the Fed to start its tapering process.”  Many investors and analysts await the end of Federal Reserve stimulus so that markets can resume movement based on traditional fundamentals. 

At 2:58 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,228.90, Down $30.80.
• Silver, $19.54, Down $0.87.
• Platinum, $1,363.10, Down $24.10.
• Palladium, $718.10, Down $20.40.

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